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MTG turns in solid results as studio grows

Nordic and international pay and free TV outfit Modern Times Group turned in a solid Q4 performance, helping to compensate for the SEK1 billion (US$114.7 million) non-cash charge it took last year on currency translation differences related to its divestment of Russia’s CTC Media.

Jorgen Madsen LindemannThe group posted Q4 sales of SEK5 billion from continuing operations, up 10.4%, and net income of SEK422 million. For the full year, MTG turned in a net loss of SEK109 million thanks to the CTC charge.

MTG Studios saw an 8% rise in organic revenues, with total revenues coming in at SEK532 million, driven by demand for scripted drama and branded entertainment. Costs also rose, but operating income was up from SEK4 million to SEK22 million. 

President and CEO Jørgen Madsen Lindemann said that the group was now well on the way to aligning its business to changing media consumption trends, and highlighted the steps it had taken to adjust its portfolio, pointing to its exit from the CIS region with the – costly, for the company – divestment of CTC, the divestment of its free TV business in Africa and its more recent sale of its 50% stake in Prima in the Czech Republic.

In line with its investment in new areas attractive to a younger demographic, Lindemann also highlighted MTG’s acquisition of a 21% in InnoGames and said that the group would up its holding to a majority 51% stake once the Prima sale is completed.

Growth in its domestic Nordic market – particularly in pay TV – led the way in terms of revenue uplift in the fourth quarter. Net sales from Nordic free-to-air TV amounted to SEK1.4 billion, up from SEK1.3 billion a year earlier, while pay TV sales amounted to SEK1.7 billion, up from SEK1.48 billion. MTG attributed the increase primarily to Viaplay subscriber growth as well as price hikes. Pay TV numbers excluding Viaplay were up by 9,000 in the Nordic region.

Operating costs also rose thanks to sports rights investments and the expansion of Viaplay.

Outside of the Nordic region, free TV sales rose slightly from SEK833 million to SEK900 million year-on-year, but pay TV revenues were down – although up on an organic basis – falling from SEK209 million to SEK172 million. Costs were also down, contributing to a modest uplift in operating income.

MTGx, the company’s new media unit, was hit by costs associated with its investment in eSports outfit ESL. Revenue was up at constant exchange rates, coming in at SEK397 for the quarter, but costs also rose leading to an operating loss of SEK84 million. For the full year, MTGx turned in an operating loss of SEK251 million.