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Modern Times Group Q2 2015 Financial Results

Key insights

7 takeaways

01
MTG's Q2 2015 strategy centers on pivoting to high-growth online video and esports to offset traditional media headwinds, with total digital sales rising more than 30% in the quarter.See it on page 12
02
The company made major digital acquisitions: a 74% stake in Turtle Entertainment (ESL), a 51% stake in Zoomin.TV, and an increased 81% ownership in Splay, aimed at synergies across gaming and influencer marketing.See it on page 3
03
Adverse currency movements hit results by roughly SEK 70 million, yet recurring EBIT stayed stable when M&A costs are excluded.See it on page 2
04
Broadcasting segments generally posted higher sales and profits, driven by cost reductions and growth in AVOD and IPTV services.See it on page 10
05
The content production segment saw lower sales and profits, attributed to reduced event production volumes and transaction-related expenses.See it on page 2
06
In the Nordics, free-to-air TV sales were stable while pay-TV benefited from strong Viaplay subscriber growth.See it on page 9
07
Emerging markets grew sales and profits despite Russia's advertising ban and instability in Ukraine, and the balance sheet stayed strong with net debt to recurring EBITDA of 0.6x to fund the digital strategy.See it on page 10

Summary

Modern Times Group’s second-quarter 2015 financial results highlight a period of strategic transformation characterized by robust digital expansion and stable core broadcasting performance. The company’s primary thesis centers on pivoting toward high-growth online video entertainment and esports to offset traditional media headwinds. This transition is underscored by significant capital allocation into digital assets, including the acquisition of a 74% stake in Turtle Entertainment (ESL), a 51% stake in Zoomin.TV, and an increased 81% ownership in Splay. These investments aim to leverage synergies across the company’s portfolio, particularly within the gaming and influencer marketing verticals.

Financial performance during the quarter remained resilient despite adverse currency fluctuations, which impacted results by approximately SEK 70 million. While recurring EBIT remained stable when excluding M&A costs, the broadcasting segments generally reported higher sales and profits, supported by cost-reduction initiatives and growth in AVOD and IPTV services. Conversely, the content production segment experienced a decline in sales and profits, largely attributed to lower event production volumes and transaction-related expenses. The company maintained a strong balance sheet, with a net debt to recurring EBITDA ratio of 0.6x, providing the liquidity necessary to fund its digital-first strategy.

Geographically, the company’s operations span the Nordic region and various emerging markets, with performance varying by local advertising trends and geopolitical conditions. While Nordic free-to-air television saw stable sales, pay-TV segments benefited from strong Viaplay subscriber growth. Emerging market segments also showed positive momentum, with sales and profits rising despite regional challenges, such as the advertising ban in Russia and instability in Ukraine. Overall, the results reflect a deliberate shift toward digital scalability, with total digital sales increasing by more than 30% during the quarter as the company seeks to capture a larger share of the global esports and online video market.