MTG claims record financial year in 2018 amid successful split with NENT
Modern Times Group, the Sweden-based media company, has claimed a record year in 2018, with higher sales, profits and margins, as well as a successful split, as it completed the spin-off of its Nordic Entertainment (NENT) arm into a separate listed company on the Nasdaq exchange on 28 March.
Nordic Entertainment comprises MTG’s free-to-air and pay-TV activities, as well as its Viaplay streaming service.
Meanwhile, MTG has transformed itself into an eSports and online gaming company, with investments in eSports companies ESL and DreamHack and gaming companies InnoGames and Kongregate.
In its annual report for 2018, MTG said of its eSports and gaming activities: “Their revenue streams are made up of sponsorship deals, media rights sales, event tickets, branded merchandise, advertising and in-game purchasing,” pointing out that the video gaming market is now worth over $100 billion, more than the movie and music businesses combined.
MTG’s other holdings include Nova Broadcasting, the broadcasting and online media company in Bulgaria that it is in the process of selling to Advance Media Group after an earlier planned sale to PPF Group was blocked by the Bulgarian competition commission.
It also has stakes in World Boxing Super Series, the annual international professional boxing tournament, and Engage Digital Partners, the creator and distributor of sports content.
MTG had started 2018 with the proposed merger of its Nordic businesses with TDC Group, “in order to create a scale consumer champion providing unique benefits for customers and significant synergies.” However, the deal collapsed following the takeover of TDC Group by a financial consortium.
NENT’s brands include Viasat, TV3, TV6, Rix FM, Viaplay and Viafree, with Sweden and Denmark the group’s biggest markets, albeit MTG claimed that “there are substantial growth opportunities in Norway and Finland.”
NENT’s net sales grew to SKr12.8 billion ($1.4 billion) in 2018, compared with SKr12 billion the previous year, while operating income was up to SKr1.7 billion from SKr1.6 billion in 2017. However, its operating margin fell to 13 per cent from 13.2 per cent.
MTG’s sales totalled SKr19.7 billion, compared with SKr17.5 billion in 2017, with 4-per-cent organic growth, while operating income was up 24 per cent to SKr1.6 billion, compared with SKr1.3 billion the previous year, before items affecting comparability.
The organic growth of 4 per cent included growth for NENT, while acquisitions contributed a further 5 per cent and primarily comprised the consolidation of InnoGames and Kongregate, MTG said.
Operating costs, excluding items affecting comparability, increased to SKr18.2 billion, compared with SKr16.3 billion the previous year, and were up 8 per cent at constant exchange rates. The increase was driven primarily by the ongoing investment in digital expansion and Viaplay together with the consolidation of InnoGames and Kongregate.
Jørgen Madsen Lindemann, president and chief executive of MTG, said of the split between MTG and NENT: “The transformation has not been without challenges, so I am proud to report that we again delivered on our profitable growth ambition in 2018. Net sales were up 13 per cent and operating income before items affecting comparability was up 24 per cent, despite being burdened by significant transaction costs related to the TDC deal and split of MTG.
“The Nordic Entertainment segment continued to perform well in 2018, with the growth in our streaming platforms more than compensating for the headwind from falling linear viewing and subscriber erosion in our satellite platform. MTG Studios reported falling sales and profits, which primarily reflected timing differences in our drama productions, but we did see a positive trend shift at the end of 2018. MTGx sales were up significantly and boosted by the consolidation of InnoGames and Kongregate, and profitable on a full year basis for the first time…
“MTG and NENT Group have bright futures ahead of them. We have talented teams with a clear focus on consumer relevance and market segments with substantial structural growth opportunities. NENT Group is a unique play on the Nordic streaming and content markets, while MTG is a unique play on esports and online gaming. Although MTG and NENT Group will now follow separate paths, we still share a common heritage and approach, a focus on consumer insight and relevant innovation, and a commitment to bring the best possible entertainment experiences to our customers.”
Last month, media rights across Scandinavia for the World Boxing Super Series, went back on the market following the split of MTG and NENT.
While MTG has retained its stake in promoter Comosa, the broadcast rights for the series were not transferred to NENT Group for the semi-finals and finals.
NENT told Sportcal that any WBSS rights deal will now be based on “individual negotiations with the local broadcasters and platforms.”