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MTG Q3 2018 Financial Results

Key insights

7 takeaways

01
MTG is executing a corporate split into two independent entities: a digital-focused company (esports and online gaming) and Nordic Entertainment Group (broadcasting, production, and streaming).See it on page 2
02
The company achieved 3% organic sales growth and a 28% increase in profit during Q3 2018, supported by disciplined cost management.See it on page 3
03
The MTGx division, covering esports and gaming, reached profitability and achieved double-digit organic sales growth, marking a significant turnaround from the previous year's EBIT loss.See it on page 8
04
Nordic Entertainment Group recorded its eighth consecutive quarter of profitable growth, as Viaplay streaming service gains successfully offset declines in traditional television.See it on page 5
05
International Entertainment saw a 10% increase in organic sales and a 67% rise in EBIT, largely driven by the performance of Nova in Bulgaria.See it on page 7
06
MTG Studios experienced a 23% decline in organic sales during the quarter, primarily due to the postponement of major scripted productions.See it on page 6
07
The proposed sale of Nova remains uncertain following a regulatory rejection, with MTG currently appealing the decision through the Bulgarian Supreme Administrative Court.See it on page 7

Summary

The third quarter of 2018 financial results for Modern Times Group (MTG) highlight a period of strategic transition and solid operational performance. The company achieved 3% organic sales growth and a 28% increase in profit, driven by strong performances in its digital and Nordic entertainment segments. A central focus of the period is the ongoing corporate split, which will see the formation of two distinct entities: MTG, a pure-play digital entertainment company focused on esports and online gaming, and Nordic Entertainment Group, which will house the company’s traditional broadcasting, production, and streaming assets.

Performance across business units was varied but generally positive. Nordic Entertainment delivered its eighth consecutive quarter of profitable growth, with Viaplay streaming services offsetting declines in traditional television. The MTGx division, which encompasses esports and gaming, demonstrated significant momentum by generating double-digit organic sales growth and successfully transitioning from an EBIT loss in the previous year to profitability. Conversely, MTG Studios experienced a 23% decline in organic sales due to the postponement of major scripted productions, though it maintains a strong pipeline for future quarters.

International Entertainment reported a 10% increase in organic sales and a 67% rise in EBIT, bolstered by the performance of Nova in Bulgaria. However, the regulatory rejection of the proposed sale of Nova remains a point of uncertainty, with the company currently pursuing an appeal through the Bulgarian Supreme Administrative Court. Overall, the company maintains a stable financial position, characterized by disciplined cost management and balanced investment in digital content, positioning both successor entities for their upcoming separation and independent listing on Nasdaq Stockholm.