mrp meeting spain / portugal august 18, 2009. spain overview a year ago we started saying: “the...

MRP Meeting

Spain / Portugal

August 18, 2009

Spain Overview

A year ago we started saying:

“The party is over, and the future looks dark grey...”

This year we say:

“We did not expect that the reality would be so black…”

Despite the negative environment, we have beenable to sail through the storm, performing much

betterthan other players in the market, whilst gardening to

obtain our own “green shoots”2

Spain Overview

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• Huge unemployment rate (18%)• Negative growth rate (-4%)

Ad sales market drop by 30% during 1st half’09

Television -30.1%Newspapers -33.1%Radio -19.9%Magazines -37.7%Cinema -47.6%Internet +2.6%

Pay TV -23.9%

Spain Overview1st half results of the main media groups

Revenues EBIT-43% -68%

-29% -73%

-27% -46%

-28% -99%

-35% -117%

-25% -69%

4 -2.3% -6.6%

4bis

Spain OverviewAd Sales Results AXN/CONECT

January – May ’09 vs. ‘08

January February March April May TotalCONECT -1.3% -16.2% +0.6% -23.4% -1.4% -8.9% Entertainment

CONECT -12.6% -21.5% -2.8% -23.5% -5.0% -13.2%Total

+18.7% -21.7% +35.1% -11.6% +22.5% +7.3%

• Despite the negative environment, AXN Spain is doing well, performing above the budget and with a positive trend in FY’10

• Ad sales collapsed in Portugal and there are no signs of recovery yet. The strong audience performance and our ad sales strategy are helping us to reduce the huge drop of 42% on the TV sales market

Overview Ad sales

Ad sales revenues 1st half ’09 vs. 1st half ‘08

AXN Spain +7.14%AXN Portugal -36.91%Total AXN -15.29%

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FY’10 Reforecast• Consistent price strategy (avoiding war of offers and

discounts)• Ad sales recovery based on robust audience and

programming blockbusters (Flash Forward & Trauma)• TVE advertising ban from Jan ’10 (1.5% tax on pay TV ops)• Joint ad sales with Fox, Cosmopolitan and Discovery through

Pulsa (starting Sept ’09)• Pay DTT distribution in last quarter of FY’10• Digital+ revenues based on MG• Imagenio re-negotiation: lower CPS• 42% drop on the TV market• Ad sales strategy oriented to provide maximum

flexibility and development of special packages• Our ad sales team is in the field supervising the local sales

house performance• AXN HD expansion to Cabovisao and other small operators• Strong growth of MEO

Spain

Portugal

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FY10 – Financials

MRP Key Strategic Issues Spain

• Maximize sale revenues and commercial opportunities by selling in bundle with Pulsa

Ad Sales

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Ad Sales

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• We will start national ad sales through Pulsa on September 1st• Two years agreement. We have an option to acquire up to 20%

of the company after 2 years• Other partners in the operation:

• Objective: maximize sale revenues by monetizing the actual audience share and the attractiveness of pay TV. Selling as a bundle will allow us to standardize rate cards, reduce commercial discounts and aggregate audiences, offering a more solid market proposition while simplifying planning process for media buyers and advertisers

• Opportunity to attract investments initially assigned to TVE



• Reinforce our bet for blockbusters and top shows. Prices are skyrocketing for blockbusters like Flash Forward and Trauma

Ad Sales

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Programming Acquisitions



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• Maintain the strong audience of AXN• Bring novelties and fresh content to maintain leadership

and attractiveness of the channel• Fierce competition from Fox. They are exploiting pan-

European acquisitions and its wide range of channels to close volume deals

• Despite the overall crisis the prices of blockbuster series have risen substantially, while secondary series remain at last year’s levels



• Reinforce our set for blockbusters and top shows. Prices are skyrocketing for blockbusters like Flash Forward and Trauma

• Potential expansion of AXN HD in Spain (D+ and cable operators)

Ad Sales

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AXN HD


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• Only D+ is offering HD services (all under the Canal+ umbrella). They are planning to expand HD next fall, adding new channels

• HD is going to be one of the main drivers for the pay TV operators (based on our experience in Portugal), but in Spain there is a long way ahead and a big opportunity for us

• Launching AXN HD on D+ will force other operators to take it• AXN HD is the only local HD channel available in the market.

Other channels are pan-European feeds



• Reinforce our set for blockbusters and top shows. Prices are skyrocketing for blockbusters like Flashforward and Trauma

• Potential expansion of AXN HD in Spain (D+ and cable operators

• Launch of Dahlia’s pay DTT platform will increase AXN awareness in the short term and audiences in the medium term

Ad Sales

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AXN HD

Pay DTT


Pay DTT

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• Pay DTT was approved by the Government on August 13th• Dahlia is planning to be ready for launch 6 to 8 weeks after

the date of approval (estimated launch date between October 1st and November 1st)

• Over 500,000 STB will be ready on the launch date• Dahlia is planning to launch a basic package including 3

channels:

• Tentative price strategy: - €19.9/month- €60 STB or €30 card adapter

• Dahlia’s projection: - Dec’09 200,000 subs- Dec’10 700,000 subs- Dec’11 900,000 subs

Undisclosed ( ?)



• Reinforce our set for blockbusters and top shows. Prices are skyrocketing for blockbusters like Flashforward and Trauma

• Potential expansion of AXN HD in Spain (D+ and cable operators

• Launch of Dahlia’s pay DTT platform will include AXN awareness in the short terms and audiences in the middle terms

• Undefined business model. Low revenue expectations

Ad Sales

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AXN HD

Pay DTT

Web & DigitalContent

MRP Key Strategic Issues Spain/ PortugalWeb & Digital Contents

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• Undefined business model for both Web and SVOD• Ad sales investment highly fragmented among thousands of

websites. Low revenue expectations• Pay TV operators are not offering SVOD services yet. Shared

revenues and no MG is the most likely model to be implemented

• Mobile TV is not working but we have been able to renew our deal with Vodafone and TMN in Portugal. We have tried AXN linear with Telefónica and D+ in Spain, but CPS offered was too low

• In Spain, P2P technology allows free access to all kinds of prime time content (music, series and movies) which is not helping to develop and monetize digital content/services

MRP Key Strategic Issues Portugal

• We have obtained a reduction on the sales commission from 40% to 30%. From next January, AXN will be the nº1 channel in ZON’s portfolio (Sic Noticias will be sold directly by Sic)

• The channel is already available from the three main operators. We expect to expand AXN HD to smaller operators over the next 12 months

• MEO obtained the license for pay DTT. Although they have not unveiled their plans, we expect that they will launch a DTT platform in second half of next year

Ad Sales

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AXN HD

Pay DTT

MRP FY11-13 Financials

Risks & Opportunities

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Risks AXN Ono

Opportunities

AXN HD Digital+ AXN HD Ono AXN Portugal MEO Pay DTT

EBIT FY’11

-$931,000

$500,000$300,000$300,000

EBIT FY’12

-$3,726,000

$500,000$300,000$400,000

EBIT FY’13

-$3,726,000

$500,00$300,000$500,000

FY’10 ReforecastKey Issues

Spain

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• SET switch-off 6 to 8 weeks after the pay DTT approval

• The Government is planning to have the Audiovisual Law ready next fall. The Audiovisual Law will regulate the sub-license of the DTT channels (which will allow us to clarify our contract with VEO)

• DTT penetration has reached 63%, so we will have to start paying the VEO fees this year

Spain FY10 – Financials

Spain MRP FY11-13 Financials

FY’10 ReforecastKey Issues

Portugal

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• Currently distributed through all pay TV operators in Portugal• Despite wide distribution, we need to encourage tuning and

dialing• Audience ratings do not reflect the actual performance of the

channel. Internal research from MEO shows high satisfaction for the channel, not reflected in Marktest’s audience reports

• Strong programming line-up and new shows will reinforce the high quality positioning. Alliance with Cosmo and TNT to acquire content for Portugal and counter Fox’s dominant position in the genre

• We expect audiences to rise over the next few months and revenues to grow accordingly

Portugal FY10 – Financials

MRP Strategic Issues

Portugal

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• Marktest’s audiometers are mostly installed in analogue households of Zon and Cabovisao. However, SET only offered in digital tiers

• Expected that MEO will be included in Marktest’s audit system this fall, thus improving SET’s ratings

• Strong efforts to bring SET to the top of mind among Portuguese viewers. We are promoting 69 as the dial number to watch

• This year we were able to fight for big titles for the channel. Already secured: Cougar Town and Ten Things I Hate About You (Disney), Park & Recreation and Royal Pains (Universal), Hawthorne, The Community, Drop Dead Diva and Dr. Oz (SPT)

Audience Ratings


MRP Strategic Issues

Portugal

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• Based on the successful experience with AXN, we are trying to get distribution of SET Portugal for Angola and Mozambique through Multichoice. Conversations in progress although we don’t expect to sign any deal until mid 2010

• We will try to introduce SET linear for mobile distribution through Vodafone and TMN. Due to the low business generated we cannot expect to get more than $50,000 from each operator

SET for Africa

SET Mobile

Portugal MRP FY11-13 Financials


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Opportunities

SET PT Mobile Vodafone SET PT Mobile TMN SET TDT AXN in Dahlia

EBIT FY’11

$50,000$50,000

$292,100

EBIT FY’12

$50,000$50,000

$718.980

EBIT FY’13

$50,000$50,000

$679,236

MRP Strategy Issues

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• Available from all Spain and Portugal operators (except ONO), but some of them offer Animax on digital extended tiers only.

• No complaints from the TV operators, but audience is not responding to the channel

• Lack of ad sales revenues due to the low audience ratings• Niche channel, while advertisers and media buyers are

concentrating their spend on the top rankers (AXN & Fox)• We are in the process of transitioning Animax into Animax

2.0, a creative, more attractive channel, open to live fiction, reality and movies. Anime content reduced and scheduled in a specific block

Animax Spain/Portugal FY10 – Financials

Animax Spain/Portugal MRP FY11-13 Financials


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Risks

Animax Imagenio

EBIT FY’11

-$900,000

EBIT FY’12

-$940,000

EBIT FY’13

-$980,000

EBIT FY’10

-$220,000

MRP Meeting

Spain / Portugal

mrp meeting spain / portugal august 18, 2009. spain overview a year ago we started saying: “the...

Documents

fy10ad sales

national ad sales

tv opsjoint ad sales

d sales market

tv marketad sales strategy

discountsad sales recovery

axn spain

axn portugal