140110 mtg corporate presentation
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1 1
MODERN TIMES GROUP
SHAPING THE FUTURE OF ENTERTAINMENT
JANUARY 2014
2
A UNIQUE PLATFORM A SUCCESSFUL TRACK
RECORD (10Y)
INTEGRATED &
DIVERSIFIED
TV EVERYWHERE &
FOR EVERYONE
DECENTRALIZED
THE STORY
10% SALES CAGR
17% EBIT CAGR
25% ROCE (AV)
15% TSR CAGR
A BRIGHT FUTURE
RISING VIDEO
CONSUMPTION
CONTENT RICH
DIGITAL DELIVERY &
ENGAGEMENT
3
First to market full service SVOD
OTT operator & leading AVOD player
+ wide range of new products &
services
Multi-platform & country content
acquisition & monetization strategy
Leading content creator, producer &
distributor
DIGITAL CONTENT
Focus on roll-out of new products to
existing markets + expansion in CEE
& Africa
GEO EXPANSION
LONG TERM VALUE CREATION
BASED ON CLEAR GROWTH STRATEGY
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
4
CONTENT REMAINS KING
WE ARE THE BIGGEST BUYER IN TOWN
Source: MTG Research
TOTAL NUMBER OF BROADCAST HOURS (2013)
OUR IN-HOUSE STUDIOS BUSINESS
HAS QUADRUPLED IN SIZE
6
TOP 10 CONTENT DISTRIBUTORS (RATED BY UK INDEPENDENT TV PRODUCERS)
HIGHEST RATED MOST USED
Source: Televisual Distributor Poll, September 2013
1 BBC WW
2 ITV Global
3 Zodiak Rights
3 DRG
3 Shine
6 Fremantle Enterprises
6 DCD Media
6 Endemol WW
10 Passion Distribution
6 All3Media
1 BBC WW
2 DRG
4 ITV Global
3 Zodiak Rights
5 Fremantle Enterprises
6 Endemol WW
8 Passion Distribution
7 Electric Sky
9 Sky Vision
9 All3Media
+
TOP 5 TV PRODUCERS IN THE NORDICS (BY SALES 2012)
#1 IN THE NORDICS…EXPANDING EMERGING MARKETS
FOOTPRINT…GLOBAL DISTRIBUTION CAPABILITY
OFFICIAL BROADCASTER OF NEXT
MONTH’S WINTER OLYMPICS
7
8
1 Data for Q1 2008 as of May 2008; Mobile video data referring to watching Video via phone 2 Data for all TV households (significantly higher for household that own a DVR)
SOURCE: Nielsen Cross Platform reports
Q1 ’09
337
323
TRADITIONAL
LINEAR TV
Q1 ’08
NON – LINEAR ONLINE VIDEO
MOBILE VIDEO 1
TIME SHIFTED 2
Q1 ‘13
365
Q1 ’12
357
Q1 ’11
358
Q1 ’10
350 +18%
CAGR NON-LINEAR
+1%
CAGR LINEAR
VIDEO CONSUMPTION IS GROWING
VIDEO USAGE IN THE USA – MINUTES PER DAY PER USER (2+)
9 9
VIAPLAY OPENS UP A NEW WORLD
AS OTT ENABLES UNIVERSAL REACH
10 10
ViaPlay Premium VOD
TV, Movies and Sports
Free VOD TV Channels
Ad Financed Services
Free VOD Sport Clips
Ad Financed Service
Free Music Streaming
Ad Financed Service
Mobile TV Companion
2nd Screen Application
Download Games Store
Transaction Service
Klipster Coupon Service Online
to Store App
Vertical video content sites
style, family, food, cool etc.
DEVELOPING FAST
WITH A WIDE RANGE OF DIGITAL PRODUCTS
xPLAY (World class VOD)
Viaplay TV play Sports
xVENTURES (Build portfolio of services)
Music Games Like.TV
xCREATIONS (Digital first productions)
Mobisodes Webisodes TV extensions
xLABS (Digital development)
Web / Apps Social Sign-on
11
MTGX - THE GROUP PLATFORM
TO ACCELERATE DIGITAL GROWTH
12
BUT EACH MARKET IS DIFFERENT
SWEDEN
CZECH REPUBLIC
2007 2012 2015
DIGITALISATION TIMELINE
401 849
4,448
Czech Sweden Russia
TV AD MARKET SIZE (USD MN)
40%
63%
87%
Russia Czech Sweden
BROADBAND PENETRATION
37%
45%
86%
Czech Russia Sweden
PAY–TV PENETRATION
RUSSIA
CZECH
REPUBLIC
13
HUGE POTENTIAL
DIGITAL DECISION TIME FOR 150 MILLION RUSSIANS
38% OWNERSHIP IN CTCM
EUROPE'S BIGGEST TV AD
MARKET IN 2015
OWN 5 OUT OF TOP 20 PAY
CHANNELS INC. TOP 2 – MORE
THAN 60 MN SUBSCRIPTIONS
HD PREMIUM PACKAGE ROLL-OUT
14
THE NEXT BIG THING
SSA = 7/10 FASTEST GROWING ECONOMIES 2011-15
#2 FREE-TV CHANNEL IN
GHANA & SOON TO LAUNCH IN
TANZANIA
PAY-TV CHANNELS NOW
AVAILABLE IN 6 COUNTRIES
ESTABLISHED CONTENT
PRODUCTION & DISTRIBUTION
PLAYER
15 15
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
2004 2005 2006 2007 2008 2009 2010 2011 2012 LTM
0
500
1,000
1,500
2,000
2,500
3,000
3,500
4,000
2008 2009 2010 2011 2012 Sep-2013
16 16
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
Acquisition of Nice Entertainment establish MTG Studios as a 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
17
18
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
19
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
20
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
21
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
22
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
23
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
24
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
25
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
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
29 29
PRODUCTION
HOUSE
Hungary
Bulgaria
Slovenia
Romania
Serbia
Czech Rep.
Costa Rica
Latvia
Estonia
Lithuania
Sweden
Norway
Denmark
Holland
MTG STUDIOS
SALES OF SEK1.7BN (2012 PROFORMA), PRODUCING >3,500H
OF CONTENT SOLD TO >80 COUNTRIES
Accelerated sales growth following investments in content, digital and geographical expansion
Established Nordic free & pay-TV operator with leading online positions
Expanding emerging market presence + largest shareholder in CTC Media
Scale content production & distribution arm + MTGx digital accelerator
Commitment to growth & shareholder returns supported by high cash conversion & low gearing
SUMMARY
SHAPING THE FUTURE OF ENTERTAINMENT
30
31 31
MTG INVESTOR RELATIONS
FOR FURTHER INFORMATION, PLEASE VISIT
WWW.MTG.SE, TEL: +46 (0) 73 699 2714 OR
EMAIL: [email protected]
THANK YOU!